Business
Mandela’s economic legacy threatened by S. Africa’s inequality
JOHANNESBURG – Nelson Mandela emerged from 27 years in apartheid jails in 1990 pledging to seize South Africa’s mines and banks. Four years later, his government slashed spending and courted foreign investors, paving the way for the longest period of growth in the country’s history.
The former president and Nobel Laureate, who died Thursday at the age of 95, was instrumental in getting the African National Congress, which led the fight against apartheid and has ruled ever since, to embrace an open economy.
“Only a Mandela could have realigned the ANC’s economic policy from the mindset of the 1950s, with the development state, with socialism, with nationalization, to the world of the 1990s and beyond,” Robert Schrire, a politics professor at the University of Cape Town, said in an interview. “He recognized that for the poor to prosper, the rich had to feel they had a future in the country.”
Yet Mandela’s legacy of economic stability is beginning to come under attack as the country fails to slash unemployment and reduce inequality. The jobless rate remains 24.7 per cent, while average earnings for black households are a sixth of their white counterparts. The ANC’s youth wing last year waged a campaign for the nationalisation of banks and mines, the very policies ditched by Mandela in 1994, and poor communities have staged a series of protests against a lack of housing and basic services.
The rand has plunged 19 per cent against the dollar this year, the worst performer of 16 major currencies tracked by Bloomberg, and was trading at 10.4751 in Johannesburg Friday. “We still have racial unemployment, racial poverty and racial inequality,” said Sidumo Dlamini, president of the 2.2-million-member Congress of South African Trade Unions, the country’s largest labour grouping and a member of the ruling alliance. “Our country is still in white hands.” Mandela’s embrace of spending rigour and foreign capital allowed the economy to expand for 15 years, until the third quarter of 2008, when the global financial crisis pushed it into recession. That growth and rising tax receipts enabled the post-apartheid government to extend welfare grants to about 16 million people and give more than 85 per cent of households access to electricity, up from 45 per cent in 1996.
Instead of nationalizing companies, Mandela coaxed foreign investors into the country. His ideological shift laid the groundwork for Lakshmi Mittal’s LNM Group to buy Africa’s biggest steelmaker in 2004 and London-based Barclays Plc (BARC) to take control of South Africa’s largest consumer bank in 2005. In 2011, Fayetteville, Arkansas-based Wal-Mart Stores Inc. bought a majority stake in the nation’s biggest general-goods wholesaler.
Restoring confidence in South Africa’s economy in 1994 was a significant achievement. Apartheid had turned South Africa into a pariah state, subjected to international sanctions and boycotts. The economy was hemorrhaging foreign capital, had only enough reserves to cover 10 days of imports and was running a budget deficit of 9.1 per cent of gross domestic product.
Mandela asked Chris Liebenberg, who had just retired as chief executive officer of what is now Nedbank Group Ltd., the country’s fourth-largest bank, to become finance minister. He accepted the job on condition that South Africa would have a market-related economy and exercise fiscal discipline.
“Those were tough times,” Liebenberg said in an interview. “We were heading for bankruptcy. Mandela was very mindful that the ANC having not been in government would not be as astute in managing the economy as it should be. He came to me because I was a banker with lots of international contacts and experience.” In his first budget, Liebenberg raised taxes, equalized the tax system for all racial groups and slashed the defense budget. Those measures helped the government to raise $750 million in 1994 in its first post-apartheid international bond sale, 50 per cent more than originally planned. By 1999, the Finance Ministry had reduced the budget deficit to 2.3 per cent of GDP.
Mandela also persuaded Chris Stals, the central bank governor, to postpone his retirement by five years to help manage the country’s transition.
“We made steady progress from day one on for those first five years,” Stals said in an interview. “Our main task was to bring us back into the world economy. Mr. Mandela certainly made a major contribution to that. The trust people had in him and his policies certainly enabled us to lay a very good foundation.”
Mandela was sentenced to life imprisonment after being convicted of treason in June 1964, serving much of his sentence on Robben Island near Cape Town. His economic thinking was framed in terms of the ANC’s 1955 Freedom Charter, which called for the country’s mineral wealth and banks to be transferred to the ownership of the people.
“The question of nationalization of mines is a fundamental policy of the ANC,” Mandela said shortly after his release. “I believe the ANC is quite correct in this attitude and we should support it.”
A year later, he assured foreign companies their investments were safe following talks with then-Chinese Premier Li Peng, who told him nationalization wasn’t viable and that China was considering selling state companies.
“The world had changed while Mandela was in jail,” said Iraj Abedian, an economist who helped craft the Mandela’s administration’s 1996 hallmark economic policy, which won praise from international investors. “His engagement with the role players in the political, economic and financial world brought that reality home.”
Mandela helped set the broad parameters of economic policy, while leaving formulation and execution to his subordinates, according to Liebenberg, who now helps manage charities established by the former president. “Until Mandela set his stamp on a policy I think it would not have been possible to drive it through the ANC,” Liebenberg said. “It certainly would not have been possible to drive it through government.”
Abedian, now CEO of Pan-African Capital Holdings, a Johannesburg-based advisory service, was struck by the attention to detail that Mandela, a trained lawyer, gave to policy making.
“He would go through every document word by word, line by line,” Abedian said. “It was a question of understanding the rationale for every step, weighing it up, questioning it in detail, far more than people would believe.” Stals recounts how after Trevor Manuel was appointed finance minister in 1996 and the rand tumbled 8.8 per cent in the space of a month, Mandela would phone him two or three times a day for market updates.
“He showed a great interest in what we did and he was always quite well-informed,” said Stals. “He liked to discuss the monetary policy issues. He never really interfered, he never really gave instructions.”
Still, the stability that Mandela engineered in those early years after apartheid never made South Africa an economic dynamo. Economic growth has averaged 3.5 per cent since 2004, compared with 10.5 per cent in China and 7.7 per cent in India.
Moreover, the Gini coefficient, a measure of income inequality, has risen to 0.63 in 2009 from 0.59 in 1993, making South Africa one of the world’s most unequal societies.
Poverty remains most prevalent among black South Africans, who make up 79 per cent of the population of 53 million.
Mandela never tackled labor laws that companies say stifle investment, or turned around an education system that has left South Africa with labor shortages for skilled jobs.
A wave of violent labor unrest that swept the country in 2012 has continued this year, with workers in the mining, agriculture and transportation industries going on strike for higher wages. The unrest peaked on Aug. 16, when police killed 34 protesters at a Lonmin Plc (LMI) platinum mine.
Labor unions and the South African Communist Party blame the 1996 economic framework, known as Growth, Employment and Redistribution, for entrenching apartheid-era inequity. The policy, which was spearheaded by Manuel and described by Mandela as “non-negotiable,” sought to trim state borrowing, contain inflation and gradually relax exchange controls.
“Established capital benefited from stabilization and liberalization measures,” while the interests of the poor and working class were largely overlooked, said Blade Nzimande, the SACP’s general secretary. The ANC’s Youth League revived calls for nationalisation, saying drastic steps were needed to distribute the country’s wealth more equitably. The league has toned down its demands since its leader Julius Malema was expelled from the ANC last year. Mandela did the best he could for the country under the circumstances, Abedian said.
“Very few people appreciated what unstable macroeconomic conditions apartheid had left behind,” he said. “In that type of environment what was critical was to have a credible, not necessarily an instant, solution. Mandela realised what steps had to be taken to normalize and stabilize the economy.”
– VANGUARD
In a blitz of honour, the Pan-Africa Conglomerate, Dangote Industries Limited (DIL), and its subsidiaries Dangote Cement Plc and Dangote Refinery and Petrochemicals stole the show at the Nigeria Employers Consultative Association (NECA) during its 2024 annual night of recognitions.
Biztellers reports that they carted away excellence awards bestowed by the private sector employers’ body, in Lagos, over the weekend.
Specifically, the Dangote Group was recognised under the Visible Impact Award for Resilience & Entrepreneurship; Dangote Cement won the Sectoral Excellence Award in the Chemical and Non-Metallic Products category, while the 650,000bpd capacity world’s largest single train refinery, Dangote Refinery won the Groundbreaking Investment award.
Basking in the euphoria of the recognitions, DIL’s Vice-President, Oil and Gas, Devakumar Edwin, described them as reflecting the values of the Dangote Group and its subsidiaries as top employers of labour showing resilience in the face of tough business operating environment.
ALSO READ: JUST IN: Port Harcourt Refinery Begins Crude Oil Processing
According to him, the award would only spur the management of Dangote to continue in the trajectory of the fine best global best practices in business with more investments in the task of rejuvenating the nation’s economy.
In the same vein, Minister of Industry, Trade and Investments, Dr. Jumoke Oduwole and her counterpart in Aviation and Aerospace Development, Mr. Festus Keyamo (SAN) were recipients of the “Visible Impact in Public Service Award.”
This year’s awards, dubbed “Defying the Odds”, NECA said, was geared towards promoting and encouraging best practices in Corporate Performance, People Management and Industrial Relations practices amongst employers in Nigeria.
This, it explained, was in a bid to celebrate outstanding contributions of enterprise to national development, noting that the award provided a platform for celebrating the resilience, doggedness and outstanding performance of employers in Nigeria.
In his welcome address, President of NECA, Dr. Ifeanyi Eric Okoye, noted that the award ceremony was to celebrate the excellence, resilience, innovation and unwavering commitment demonstrated by businesses across the various sectors of the Nigerian economy in 2024.
He said the Awards’ theme, “Defying the Odds,” reflected the indomitable spirit of the Nigerian enterprises that had consistently risen to the challenges posed by the dynamic and demanding local and global economic landscape.
Said he, “This annual ceremony is a testament to remarkable progress made by organisations that share our vision of a thriving private sector as the bedrock of national development. Over the years, the NECA’s Excellence Award has become a hallmark of prestige highlighting organisations that exemplify best practices in corporate governance, industrial relations and environmental sustainability.
“Our honours tonight do not only serve as a beacon of hope, and a reminder that in the face of adversities excellence is achievable, it is also an opportunity to increase visibility by highlighting their achievements and innovations to a wider audience.
“As we celebrate tonight, let us not only celebrate the achievements of the award recipients; let also celebrate all businesses here present and those that have left in the past few years and recommit ourselves to fostering innovation, inclusivity and resilience in all that we do. Together we can build a future where Nigerian enterprises thrive as global leaders.”
In the same vein, the Director General of NECA, Mr. Adewale-Smatt Oyerinde, explained that the awards were a statement that, irrespective of the challenges the private sector employers have been facing “since January till now, there is time for all of us to sit down and just breathe and celebrate the resilience, doggedness, innovations your businesses were able to bring on-board and their contributions to national development”.
Oyerinde stated further: “So, we are gathered this evening to celebrate your businesses, contribution and support to NECA. We have broken away from the traditional issues of labour and employment that you know us with and are now dealing with all fundamental issues that affect your businesses either now or in the future like Environmental, Social and Governance in sustainability issues.
“We are also deepening our collaboration with CIPE moving into the realms of ethics with emphasis on doing business correctly. We are also deepening our engagements with the International Labour Organisation (ILO) in the context of responsible business conduct for our members to operate responsibly within the context of the law.
“This strengthens our hands to advocate against unfavourable business regulations that see businesses as cash cows rather than agents of national development.”
Lagos State Governor, Mr. Babajide Sanwo-Olu, represented by Head of Service, Lagos State, Mr. Shuaheeb Agoro, commended the NECA for its remarkable legacy of championing enterprise, competitiveness, responsible business practices and industrial harmony describing the award as another remarkable way of motivating employers in the private sector.
Sanwo-Olu said, “This year’s theme could not to be more apt as it speaks to the determination that Nigerian employers have continued to demonstrate in overcoming challenges to sustain businesses, create jobs and drive national development. This resilience is a reflection of enduring entrepreneurial spirit that defines our great nation.”
The governor pointed out that the award inspires the culture of best practices in corporate governance, industrial relations, environmental sustainability and responsible business conduct.”
Nigeria’s Gross Domestic Product (GDP) grew by 3.46% year-on-year in the third quarter of 2024, marking a strong performance compared to the 2.54% growth recorded during the same period in 2023 and 3.19% in Q2 2024, according to the latest data from the National Bureau of Statistics (NBS).
The growth was largely fueled by the services sector, which expanded by 5.19% and contributed 53.58% to the overall GDP.
READ MORE: Reps Debate Tinubu’s Loan Request
“The performance of the GDP in the third quarter of 2024 was driven mainly by the services sector,” the NBS stated in its report.
Key areas in this sector, including financial institutions, telecommunications, and trade, played significant roles in the economy’s growth.
The agriculture sector, while still positive, showed a slight slowdown, growing by 1.14%, compared to 1.30% in Q3 2023.
The industrial sector, however, posted a notable recovery, increasing by 2.18%, a marked improvement from the 0.46% recorded in the same quarter of 2023.
In nominal terms, Nigeria’s GDP at basic price for Q3 2024 reached N71.13 trillion, a substantial 17.26% increase from the N60.66 trillion recorded in Q3 2023.
“This performance is higher when compared to the third quarter of 2023, which recorded an aggregate GDP of N60,658,600.37 million, indicating a year-on-year nominal growth of 17.26%,” the NBS added.
The non-oil sector also showed strong performance, growing by 3.37% in real terms during Q3 2024, outperforming the 2.75% growth seen in the same quarter of 2023 and exceeding the 2.80% growth recorded in Q2 2024.
“The sector was driven in the third quarter of 2024 mainly by financial and insurance (financial institutions); information and communication (telecommunications); agriculture (crop production); transportation and storage (road transport); trade; and construction, accounting for positive GDP growth,” the NBS explained.
Despite the growth in the non-oil sector, its share of the total GDP decreased slightly to 94.43%, compared to 94.52% in Q3 2023, though it remained higher than 94.30% in Q2 2024.
The oil sector, in contrast, recorded a 5.17% year-on-year growth in Q3 2024, reversing the -0.85% decline seen in the same period in 2023.
However, growth slowed from the 10.15% recorded in Q2 2024. The NBS reported that Nigeria’s oil production averaged 1.47 million barrels per day (mbpd) during the third quarter, a slight increase from 1.45 mbpd in Q3 2023 and 1.41 mbpd in Q2 2024.
Family-owned businesses (FOBs) can continue to drive economic success, create value for shareholders, and positively impact their communities worldwide by staying true to their core values and adopting strategic practices that prioritise long-term growth, efficiency, and resilience.
This was part of the submission made by the Group Executive Director of Dangote Industries Limited, Halima Aliko-Dangote, during the Forbes Global CEO Conference in Bangkok, Thailand.
Halima, who is also the Executive Director, Family Office, spoke at the panel session on Family Business: Looking at the Next Frontier, opined that family-owned businesses have demonstrated exceptional resilience, navigating challenges and thriving over multiple decades.
Other speakers include the Managing Director and CEO of Worldwide Hotels, Carolyn Choo; the Managing Director of Damen Yachting, Rose Damen, a third-generation family shareholder of Damen Shipyards Group; and Co-Chairman of B.GRIMM Pharma, President of B. Grimm Joint Venture, and Board Member of B. Grimm Power, Caroline Link.
ALSO READ: CSR: Dangote Cement Fuels Education With Support Projects At Lagos Schools
According to her, success in family-owned businesses starts with shared values, goals, governance policies and alignment adding that reputation is part of ‘family capital’.
She maintained that governance structure, adherence to core values, customer satisfaction, optimization of shareholder value, meritocracy, integrity, leadership, brand equity, diversification/growth, philanthropy and preserving generational wealth play key roles to the success of our businesses.
Halima revealed that Dangote Group’s governance policies do not allow board and management to operate in silos as each business unit has at least three independent directors who offer a holistic view.
On other factors of success for Dangote Group, Halima emphasized, “We family-owned businesses have to stick to our tradition of asset rich-cash moderate or as my father will correct me, asset rich-cash poor. We as Dangote perpetuate a profitable business with strong values and strong governance structure. We make money while building our nation by contributing heavily to the global economy, creating massive jobs, thinking of our great grand kids and contributing excessively to humanity.”
Highlighting the significant contribution of FOBs to the global economy, Halima noted that studies by Mckinsey showed that they account for more than 70% of global GDP, generate annual turnovers of between $60 trillion and $70 trillion, and provide around 60% of global employment.
She stressed the crucial role these businesses play in creating jobs, sustaining communities, and driving development in sectors such as manufacturing, education, healthcare, and infrastructure across the world.
“Family-owned businesses (FOBs) have proven to be resilient, weathering challenges and thriving across multiple decades. Despite facing external pressures, many FOBs not only survive but also grow, contributing significantly to the global economy in ways that are often underestimated or overlooked,” she said.
She also pointed out that family-owned businesses often employ two key approaches in preparing the next generation for leadership roles: internal and external capacity building. Regarding internal capacity building, Halima explained that many families create internship programmes for young family members interested in taking over the business or assuming leadership positions.
“In Nigeria, we train the next generation so they can grow organically to leadership roles in family businesses. My dad’s approach is for you to start from ground up knowing you will get to leadership role if you work hard and do your job right. These experiences make it easier for you to learn the ropes and be prepared for leadership role in the future,” she pointed out.
On external capacity building, Halima discussed the practice of sending younger generations to work in non-family businesses. This approach enables them to acquire new skills, learn better processes, and gain diverse perspectives that can benefit the family business in the long run.
Halima revealed that she started her career as an Analyst at KPMG before joining Dangote Industries Limited.
The approach, she explained “removes the familiarity tag as the young generation got employed as other people and supervised to monitor their performance. This has been a common avenue business families have chosen to pursue for many years, having their next generation spend three to five years working outside the family business before eventually joining with a new set of skills and business knowledge.”
Addressing the challenges of succession planning, Halima emphasised the importance of involving the younger generation in the business early on.
She suggested that this creates a space for open communication, where the next generation can share their thoughts, ideas, and aspirations, while the senior generation provides critical information to help the next leaders make informed decisions.
She stressed the need for a balance between tradition and innovation in family-owned businesses. While tradition provides continuity and stability, she noted that innovation is vital to staying relevant and competitive in the modern marketplace.
“Successful family businesses recognise the need to adapt to changing consumer preferences, technological advancements, and market trends. Family businesses often have a wealth of experience and deep-rooted traditions. They can also benefit from external expertise and fresh perspectives,” she concluded.
Nwifuru Suspends Commissioners, Perm Sec, Exec Secs
Adeleke Salutes Atiku On 78th Birthday
Dangote Group, Subsidiaries Steal Show At NECA’s 2024 Visible Impact Awards
Gov Sanwo-Olu Suspends Aide Over Controversial Tweet
JUST IN: Port Harcourt Refinery Begins Crude Oil Processing
FULL LIST: 2024 Billboard Music Awards: Asake, Tems, Rema, Burna Boy Shines
OSSG Raises Alarm Over Murder Plot By APC Chieftain
NCC, SMEDAN, NAICOM, SEC, Others Set for SUPERNEWS SMEs Conf June 13
Sahara’s Tonye Cole resigns from GPHCDA
Oando opens ultra-modern petrol station in Lagos
Niger Delta Avengers: President Buhari Reads riot Act …considers the carrot and stick option
